News and commentary about road pricing across the globe. Tolls, congestion charging, distance based charging, road user charging. Public policy, economics, technology and more. If Google brought you here, look down the right sidebar for references.

Thursday, 31 March 2011

I have added a link to the small congestion tax page for the city of Gothenburg in Sweden. Gothenburg plans to introduce congestion pricing as of 1 January 2013 closely following the approach taken by Stockholm, to the point that the concept and technology are nearly identical. The only interesting variations are the inclusion of an internal cordon at Gota Alvbron, and an extension of the cordon west to cover a river crossing at Alvsborgbron.

It is planned to operate 0600-1829 weekdays, excluding July (which is deemed to be a holiday month). Political approval for the tax was reported in January 2010.

Proposed Gothenburg cordon

The purpose is stated as being:

1. Reduce the impact of car traffic on the environment. Road traffic accounts for a large part of the climate-damaging carbon dioxide emissions, these emissions need to fall for us to meet our climate objectives. The tax is a financial incentive to reduce vehicle traffic and divert to public transport.

2. In a dense urban core, more road space is needed to increase usage of other modes (public transport, cycling and walking).

3. Enable the Gothenburg region to pay for major investments in public transport, rail and road. This is to implement costly but important infrastructure investments earlier than it would otherwise have been able to "regular" tax funding.

Already the Ministry of Finance is proposing inflation-proofing of the tax with another increase in 2015.

The intention is that charges be cheaper during the inter-peak period, and the technology used will be ANPR (Automatic Number Plate Recognition) as is used in Stockholm. The tax will comprise a single cordon, which includes a river crossing boundary outside the cordon. A map is available here (click the box Visa trängselskatteområde to get the cordon).

Once again, congestion pricing should be proven to have a positive effect on congestion and be helping to finance improvements to both rail and road infrastructure, both are important as motorists need to get value not only from reduced travel times, but also some capital investment if other charges are not to be reduced. It will be interesting to see whether this catalyses similar steps in more European cities. In my view the move is rather adventurous at a time of significant economic downturn, but for practitioners of tolling and advocates of economically efficient road pricing it will add another real time case study to the mix, and I expect another argument to support the point that road pricing can work to reduce congestion.

According to a Washington Times editorial, the Congressional Budget Office is claiming road users should pay more because of externalities, but it claims that the lack of funds for roads are not due to a lack of funds, but because of funds diverted into “mass-transit programs and grants to local police departments to run speed traps”. The CBO supports VMT (Vehicle mileage tax) because of the need to protect revenue.

In other words, it is a bit of a rant. The hint of truth is that, yes funds are diverted to other purposes, and legitimate arguments can be made about that.

However, the best argument for VMT is not revenue protection. For there can always be multiple ways of addressing that (although none of the others are particularly good), it is that VMT can far more effectively address congestion and be the platform to treat roads as an economic good and a service with revenue linked to investment, rather than a public good funded from politiclaly driven taxes.

While it is easy to get angry about the misuse of funds, the answer is not to oppose more efficient road pricing, but to support better governance mechanisms for the use of the revenue collected.

Tuesday, 29 March 2011

While much publicity has been seen in the European Commission draft transport white paper calling for a ban on cars with internal combustion engines from cities, it is also strongly in favour of road pricing, albeit for purposes likely to be controversial to many road users. I doubt there will be a 50% shift from road to rail and water for intercity passenger (and especially freight) trips, but this blog is about road pricing. So what does it mean for the 27 EU Member States?

For a start it is a White Paper, which means it forms a strategic policy framework which provides guidance but is not to be legally enforced across all Member States in all forms. Much implementation will be at the national and local level, so the EU role will be more limited.

I have found a few references to road pricing:

2.4 "Road pricing and the removal of distortions in taxation can also assist in encouraging the use of public transport and the gradual introduction of alternative propulsion." So it is seen as a tool to penalise existing road users.

3.3. Concern over the need for trucks to have multiple toll and vignette transactions to cross multiple borders, with interest in pursuing a single interoperable approach. The key problem of course is that despite this goal, most truck operators do not have vehicles crossing so many borders, but rather just a few. The market for this is not large.

It wants to encourage direct charges to raise revenue, but also "internalisation of externalities". That means charging for pollution. It also advocates users paying a greater proportion of costs, which is more of an issue for public transport than roads, although I doubt the EC would acknowledge that. However, I have no issue with encouraging user pays.

Yet, it becomes more specific here:

For passenger cars, road charges are increasingly considered as an alternative way to generate revenue and influence traffic and travel behaviour. The Commission will develop guidelines for the application of internalisation charges to all vehicles and for all main externalities. The long-term goal is to apply user charges to all vehicles and on the whole network to reflect at least the maintenance cost of infrastructure, congestion, air and noise pollution.

Noise? Somehow relieving property owners from their choices around location would seem to be far from economically efficient. However, the goal is ambitious - full network pricing that recovers "at least" costs of infrastructure, congestion and pollution. Why it could be more (other than a profit factor) is unclear.

The EC wants a leading role to revise vehicle taxation saying that by 2016:

• Phase in a mandatory infrastructure charge for heavy-duty vehicles. The scheme would introduce a common tariff structure and cost components such as the recovery of wear and tear, noise and local pollution costs to replace the existing user charges.

• Evaluate existing car road charging schemes and their compatibility with the EU Treaties. Develop guidelines for the application of internalisation charges to road vehicles, covering the social costs of congestion, CO2 – if not included in fuel tax – local pollution, noise and accidents. Provide incentives to Member States who launch pilot projects for the implementation of schemes along such guidelines.

• Proceed with the internalisation of external costs for all modes of transport applying common principles while taking into account the specificity of each mode.

• Create a framework for earmarking revenues from transport for the development of an integrated and efficient transport system.

• Issue guidelines providing clarification concerning public funding to the different modes of transport and to transport infrastructure, where necessary.

• Reassess transport taxation where necessary, namely by linking vehicle taxation to environmental performance, reflecting on possible way forward to review the current VAT system concerning passenger transport, and revising company car taxation to eliminate distortions and favour the deployment of clean vehicles.

I understand fuel tax as a CO2 charge, but not beyond that if you have full road pricing. The agenda for trucks is clear, all should pay a charge to reflect infrastructure and external costs by 2016. For cars, there is interest in piloting congestion charges. However, note that the system is meant to be used to subsidise other modes. Quite why they should expect financial support if road transport is efficiently charged escapes me, as this is far from efficient.

It wants to subsidise toll systems and interoperable tolling saying "Provide EU support for developing and deploying technologies that improve infrastructure use efficiency and decarbonisation (new road network pricing and tolling systems, ITS and capacity improvement programs)"

So in conclusion, it is ambitious. The EU wants full network road pricing, which reflects infrastructure costs and environmental costs, and it wants it now. It wants to standardise systems across Europe and incentivise trials for congestion charging. However, as much as this is interesting and positive, it also harbours a clear anti-road transport agenda, wanting to use such charges in part to subsidise other modes, even though such pricing ought to eliminate any need for this.

The bigger question is how this will influence EU Member States. The EU has supported pricing before, but it would be hard to say that the EU has effectively made much difference in promoting it. Member States have pursued truck tolls, highway tolls and congestion charging based on domestic political considerations. The useful EU role has been to ensure non-discrimination and transparency are applied to tolls so that they are not applied in ways to penalise foreign road users. It would be unfortunate if it saw its role to be to unfairly and inefficiently penalise road transport once road pricing systems are in place.

The new European Union Transport White Paper (which has a far wider remit than roads) is available here as a PDF.

Thursday, 17 March 2011

Further to the story from yesterday, French website Transport Logistique reports that the Swiss based consultancy firm RAPP Trans is the firm implicated in presenting a potential conflict of interest with the French heavy vehicle tolls project.

The report (in French) indicates the consortium ALVIA (comprising Sanef, Siemens and Atos) alleges "that the competitive dialogue did not obey "the principle of transparency and the principle of inviolability of applications".

The problem allegedly being that the French government relied on RAPP Trans to provide it with professional services. RAPP Trans is a technical consultancy, best known for having designed the Swiss LSVA heavy vehicle distance based charging system that has been in place since 2001. It has also undertaken other technical advice work in a number of European countries.

RAPP Trans also allegedly has "close trade links" with Autostrade, the lead company in the winning bid for the French system, through work with the European Commission.

The fundamental legal question in the appeal will likely be whether those links are sufficient to overturn the tender.

The appeal will be most interesting. If the appeal does not succeed, it will raise questions about how transparent RAPP Trans was with the French government about its relationship with potential suppliers, it will possibly create a far higher standard of due diligence of separation of roles between advisors (if RAPP Trans had done work for Autostrade during the time of its work for the French government, it would appear to be a clear cut case of conflict, but if the relationship was beforehand it would seem less clear). It could simply mean consultants have to choose more distinctly whether they want to advise governments or advise suppliers. It is a decision that gets undertaken quite frequently - and it does not look good if any company is caught out appearing to be able to give unfair advantage to tenderers.

Wednesday, 16 March 2011

A French Court has suspended the contract offered to the Autostrade led consortium to develop, build, install and operate a distance based heavy vehicle toll system on untolled French highways, because of allegations of conflict of interest according to Le Monde. The Ecotax contract had been won by a consortium called EcoMouv.

The issue appears to be that one of the companies associated with the winning consortium was also providing advice to the French government that issued the tender - a classic case of conflict of interest. It is hardly appropriate or ethical business conduct if this is the case, as one cannot be seen to be providing advice to a government entity that issues a tender, whilst also being party to one of the tenderers.

More details will be reported as they come to hand, but the Autostrade led consortium (Ecomouv) intends to appeal the decision. If the decision holds, at the very least it will mean the tender will need to be started from scratch, and anyone that was a party to the alleged conflict of interest would be ruled out - which could be very costly for those involved. However, regardless of the outcome of appeals, it would appear that the proposed heavy vehicle toll system for France is suspended.

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What is road pricing?

Road pricing is any system that directly charges motorists for the use of a road or network of roads. Traditionally it has meant tolls on single routes, particularly crossings such as bridges or tunnels. More recently it also includes area, cordon and zone pricing of urban areas, and distance and time based charging of whole networks. It does not include fuel or tyre taxes, or taxes on ownership or purchase of road vehicles.